Note: We recently re-acquired full rights to my book 6 Secrets to Startup Success (AMACOM, 2011) in order to refresh, enhance and re-purpose the content. Below is the first in a series of revised excerpts from the book (new Kindle version available here).
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As a parent, or as an entrepreneur, you begin imprinting your beliefs from Day One, whether you realize it or not. If you have made the mistake of doing business one way for five years, you can’t suddenly impose a layer of different values upon it. By then, the water’s already in the well, and you have to drink it.
Howard Schultz, founder of Starbucks
In a startup environment, every choice you make sets a tone and drives a pattern.
- What kinds of issues are openly discussed?
- Which topics are politely avoided?
- How are tough questions raised and resolved?
These choices plant the seeds of your future culture. Better yet, these choices are your culture. And, with time, the moist clay of these early choices will harden into a force beyond easy control.
Instead of surfacing tough issues, many venture teams surrender to a psychological pressure to do the opposite. A kind of beggar’s mentality takes hold of new founders, who are so grateful for support from partners and investors that they shrink from delivering bad news or raising thorny topics. They want to seem—they want to be—on top of things, so a lot of energy goes into posturing instead of seeking the truth. The paradoxical result is that the most critical topics are the least likely see the light of day. As consultant Ken Macher observes, “the thing that people feel most sheepish about bringing up is often the very thing that needs to be discussed.”
One by-product of entrepreneurial passion—and the motivational media that feed it—is that founding teams too often behave as if feeling good is the same thing as forward movement. If we are floating on air, the thinking goes, then things must be on track. Conversely, people who ask scrutinizing questions are cast as negative or disloyal. Doubt is an enemy to be banished.
But every new venture journey is fraught with real risks and real threats. Doubts and fears, when properly prioritized and evaluated, clarify problems that desperately need attention. “Startups are right to be paranoid,” says Y-Combinator’s Paul Graham. “But they sometimes fear the wrong things.”
This tendency for positive spin shows up in a familiar shell game between entrepreneurs and investors, where founders amplify good news and sanitize the bad. But smart investors know that rosy reports don’t equate to value creation. Chris Holden remembers how impressed he and his colleagues at Court Square Ventures were when a newly funded founder raised what could be considered bad news just after finalizing the investment deal. “One of the reasons his business took off so fast is that he had no pride about coming back to us, five minutes after the ink was dry on our deal, saying ‘I think I might have misjudged this piece of the equation, and we need to change it this way or that way.’” In countless other deals, Chris has worked with founders who won’t acknowledge tough issues. “They don’t want to go back to their investors with anything that makes them look like they weren’t perfectly prescient, with perfect foreknowledge, or anything that makes it look like things are shaky underfoot,” he says. “But in reality, what the investor craves is the opposite. Because you know that things are going to be shaky underfoot. You’re on shifting sands always. What you want to see is their reaction.”
Think of adversity as more than an inevitable companion on your startup journey. It is a sign that you are focusing on knotty problems that need untangling. Turbulence builds muscle and opens windows into your team’s talent, character, and commitment.
Mastery in any field comes through tough stretches of grinding and problem solving. The path to sustained venture success is no different. For the most part, value creation is the result of unglamorous day-to-day toil, not satisfying high-five moments. As Warren Buffett noted of a similar playing field: “Beware of investment activity that produces applause. The great moves are usually greeted with yawns.”
John Bradberry – Charlotte, NC
